The King of Good Times has flown into the worst of times. But what went so very wrong with Kingfisher Airlines? In my opinion, the Kingfisher model is inherently flawed – a complete mismatch in the Indian context. It is not just a full service, it's a full service + +. It's Kingfisher First Class, as Vijay Mallya flaunts it.

You cannot grow in this segment beyond a point simply because very few people can afford it. Kingfisher looked at the top of the pyramid to grow, but the actual volume — an almost inexhaustible customer pipeline - was at the base of the pyramid. When there is excess capacity at the top end of the customer segment, you end up selling tickets at a discount and fail to expand the consumer base.

Brand Kingfisher is very strong and vibrant. It is an excellent product and service offering, and the airline has a massive network it inherited from Air Deccan — almost twice that of Jet Airways. Vijay Mallya is a very smart and shrewd businessman with charisma. His big mistake was to change Air Deccan to Kingfisher Red. He should have kept the two brands separate.

There was little difference between Kingfisher Airlines and Kingfisher Red as they looked the same and offered similar service. Mallya tried to make Kingfisher Red sexier, but that led to it becoming neither low-cost nor full-service. It got stuck in the middle.

The blurring of the brands saw passengers migrating from Kingfisher Airlines Economy to KF Red, which was cheaper and almost on par. And the low-cost fliers ditched Red for the really low-cost airlines. Result: both the mother brand and the subsidiary were hit.

Mallya failed to realise the worth of Air Deccan. It had a fantastic network covering 70 cities, of which 25 were monopoly routes. After the acquisition, he removed Air Deccan from the routes in which his full-service airline was flying in the same time slots, thinking it would fill up the KF full-service aircraft.

But those being very cost-sensitive routes, mostly between tier two/tier three cities, passengers moved on to other low-cost airlines like Indigo and Spicejet. It was a fatal mistake to add frills to Kingfisher Red and make it costlier than Indigo and Spicejet.

Writing on the wall

Mallya was never comfortable with the low-cost business model. To me, the writing is on the wall: Low-cost carriers are the ones making money even in matured markets across the world. When less than three per cent of our population is flying, you should know where the growth will come from. But to run a low-cost business, it is also very important that you are not embarrassed about your brand.

The low-cost economics are much better. Without business class seats, TVs, galleys, beverages, magazines, cutlery and other frills, aircraft become cheaper and lighter, the latter in turn resulting in lesser fuel burn. You get more seats and the sale of food on board brings you extra revenue.

Air Deccan had given Mallya the edge to tap the low-cost market to the fullest. He should have focused on ticket pricing. Instead he concentrated on attracting passengers by giving freebies — an experiment that failed miserably in the West. He served caviar and champagne to passengers on international routes, food came in silver cutlery.

He indulged domestic passengers too with luxuries in the air which came for a price. Result: Kingfisher became more expensive than Jet Airways. To passengers, the price tag matters more than freebies. So, while Kingfisher splurged to woo passengers with luxuries, they opted for Jet and other airlines instead. A double whammy.

Mallya should have set up a dedicated team for managing the airline. For quite some time, he did not even have a CEO to look after Kingfisher, he did the job himself. For Naresh Goyal, Jet Airways is the sole business. But Mallya has other businesses and passions. He could not give Kingfisher the 100 per cent attention it needed. However, there is no denying that he is extremely sharp, knowledgeable and a workaholic.

He did not use the financial advantage when he had it. He did not raise equity when it was easily available at the time of the KF-Air Deccan merger. Now, he is ready to accept equity with any strings attached.

He did not time the airline's international foray well. In fact, I think he made a big blunder there. He should have waited till the domestic airline returned profits. Large twin-aisle aircraft and building an international network suck up lots of cash.

Then there was the global recession and he got mired in quicksand. He ordered all kinds of aircraft and kept deploying them at a frenetic pace, creating complexity and increasing costs and expanding capacity in a model which doesn't support his kind of expansion.